Step-by-step plan for taking over a business

1. Create a search profile

Have you not found a business yet? Create a search profile for yourself. In a search profile, you describe what kind of business you want to take over. By setting up some criteria, you get more focus. For example, what are you good at? What challenges do you want to overcome? Which region are you considering? And how much money do you have available for the takeover?

2. Ask for advice when taking over a business

Taking over a business is a complicated process. For example, you must sign a purchase contract and the value of the business must be calculated. That is why guidance during the business takeover is sensible. The Netherlands Chamber of Commerce (KVK) advises about business takeovers (in Dutch).

3. Look for a business takeover offer

Look for a business that fits you according to your search profile and approach the owners. KVK gives tips for finding and buying a business.

4. Ask for the memorandum of sale

With a memorandum of sale you gain insight into the business and the value of the business. The memorandum of sale includes the history of the business, organisational structure, and financial situation.

5. Sign a confidentiality statement

The seller has to give you confidential information about their business. Because this information is only for you, they will ask you to sign a confidentiality statement. A confidentiality statement is also called a non-disclosure agreement (NDA).

6. Calculate the value of the business

The value of your business is calculated based on concrete assets. But also goodwill influences the value of a business. There are several ways to do a company valuation. You can use the balance sheet, current profit, or the goodwill. But whatever the asking price may be, the actual price is always determined after negotiation.

7. Record the agreements in a declaration of intent

Record agreements that you make during business takeover negotiations in a declaration of intent. Keep in mind that the agreements in a declaration of intent are binding for you and the seller.

8. Do your due diligence

You are obligated to check if the information the seller gave you is correct. A common way to do so, is due diligence. A consultant or accountant can help you with this.

9. What you do and don’t take over

You should discuss the following topics during negotiations:

• Business premises. Do you want to take over the business premises? Look if it is possible to take over the leasing contract with subrogation.
• Intellectual property
• Product liability and granted guarantees
• Ongoing contracts,for example with suppliers and clients
• Phone numbers and email addresses of the business
• Ongoing subscriptions, such as on phones, internet, and window cleaners
• Customer data
• Pending lawsuits
• Credits and debts
• Permits

10. Draw up a purchase agreement

Is the sale almost complete? Then you can draw up a purchase agreement together with the seller. You use the declaration of intent (step 7) as a basis. For example, you can include an annulment clause in the purchase agreement.

11. A new owner, a new KVK number

If you are purchasing a sole proprietorship (eenmanszaak) or a general partnership (vennootschap onder firma, vof), the business will get a new KVK number. For this, make an appointment at KVK to register your new business in the Business Register. KVK will pass on your data to the Tax Administration. You do not need to register with them. When the Tax Administration registers you as an entrepreneur in their administration, you get your VAT-ID and the VAT number.

12. Financing your business takeover

When you take over a business, you can use your own money. You can also finance the business takeover with other financing options. For example, a subordinated loan with the seller or lessor. With these forms of financing, the seller often stays involved with the business for a period of time. Make clear agreements about financing to prevent trouble afterwards.

13. Do not pay VAT on the sales price

All VAT arrangements that apply to the business, pass on (in Dutch) to you. They are not person-related, but related to the business. That is why the seller cannot add VAT to the selling price. The seller will stay liable for tax debts until the takeover of the business.

Facts and figures: How many mergers and takeovers are there?

The graph below shows the number of mergers and takeovers per quarter.